Governor Signs Publicly Funded Health Insurance Contribution Act


Michigan Governor Snyder has signed into law the "Publicly Funded Health Insurance Contribution Act." This Act requires that all public employees pay a certain percentage of the overall cost of purchasing health insurance.

The bill would require that public employers who offer medical benefit plans to their employees or elected officials will be subject to maximum spending limits for their employee's health insurance. Public employers will be limited to paying either a maximum "hard cap" on premium contributions, or paying no more than 80.0% of the total annual costs of all the medical benefit plans they offer to employees and elected officials.

The bill defines "costs" and "total costs" of a medical benefit plan so as not include copayments, coinsurance, deductibles, other out-of-pocket expenses, or other service-related fees assessed to the covered beneficiary.

By a 2/3 vote of its governing body each year, a local unit of government may exempt itself from the spending limitations of this new law. However, this exemption is not available for school districts.

Financial penalties included in the Act include the loss of state aid for failure to comply.

The Act takes effect January 1, 2012. Labor contracts in place as of that date do not need to be amended. Contracts negotiated between September 15 of this year and January 1, 2012 must adhere to the new law.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Varnum LLP | Attorney Advertising

Written by:


Varnum LLP on:

JD Supra Readers' Choice 2016 Awards
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.